'This Week' Transcript: Tim Pawlenty and Michele Bachmann

TAPPER (voice-over): This week, decision time for Tim Pawlenty after a Bachmann blowout. The congresswoman wins the Ames straw poll, acing the first big test of the presidential campaign. And now her Minnesota rival faces a tough decision. And Congresswoman Bachmann joins me to discuss her straw poll victory. Will his third-place finish end Pawlenty's struggling campaign? We're live with him exclusively in Iowa to get the answer. But was the weekend's biggest winner the one that didn't compete?

PERRY: I declare to you today as a candidate for president of the United States.

(voice-over): On a rollercoaster week that has President Obama looking more vulnerable than ever before, our special Iowa roundtable tackles 2012: George Will, Laura Ingraham, Matthew Dowd, Kay Henderson, and Amy Walter, all here in the first-in-the-nation state.

ANNOUNCER: This is a special edition of "This Week with Christiane Amanpour." Live from Ames, Iowa, ABC News senior White House correspondent Jake Tapper.

(END VIDEO CLIP)

TAPPER: Good morning. Christiane is off this week. We're coming to you live from the center of the political universe, Iowa. We'll have all the highlights for you from yesterday's straw poll, plus an interview with Congresswoman Michele Bachmann, who finished first in the straw poll. Plus, all eyes are on former Governor Tim Pawlenty, who came in a disappointing third. We'll have an exclusive interview with him.

But, first, here's the news since your morning papers.

Four people were killed and about 40 injured after a stage collapsed at the Indiana state fair. A powerful storm sent steel scaffolding tumbling into the panicked crowd awaiting a performance by the country band Sugarland. The state fair will close today.

Here in Iowa, Congresswoman Michele Bachmann is taking a victory lap today. She won the Ames straw poll with 29 percent of the more than 16,000 votes cast. Congressman Ron Paul was nipping at her heels with 28 percent, while former Minnesota Governor Tim Pawlenty placed a distant third, with just 14 percent.

As for the also-rans, former Senator Rick Santorum got 10 percent of the vote; pizza mogul Herman Cain 9 percent. Four percent of the straw poll attendees wrote in Rick Perry; that's 151 more than voted for Mitt Romney, whose name was on the ballot. Bringing up the rear, Newt Gingrich and Jon Huntsman.

So today brings new momentum for Congresswoman Michele Bachmann and some serious questions for former Governor Tim Pawlenty. He joins me now to
address them.

Congressman, a disappointing -- I'm sorry, Governor, a disappointing finish for you. What went wrong?

PAWLENTY: Well, it was disappointing. But let me first say, Jake, this has been an incredible process. It's been a great honor for Mary and me
and our team to convey the message of trying to get this country back on track -- and I think it is off-track -- but bringing my record forward as a two-term governor of a blue state, doing things like getting government spending under control, doing health care reform the right way, and much more.

But obviously that message didn't get the kind of traction or lift that we needed and hoped for coming into the and out of the Ames straw poll. We needed to get some lift to continue on and to have a pathway forward. That didn't happen.

So I'm announcing this morning on your show that I'm going to be ending my campaign for president, but I'm very, very grateful for the people of Iowa, the people of this country, who I had a chance to make my case to, and for my supporters and staff and friends who've been so loyal and helpful. I really appreciate all of them.

I wish it would have been different. But, obviously, the pathway forward for me doesn't really exist. And so we're going to end the campaign.

TAPPER: What do you think went wrong? You're a popular two-term governor from a neighboring state. You had a lot of organization. You had some money at one point. Why couldn't you sell the dog food here?

PAWLENTY: Well, I hope it's better than dog food, Jake. It's more...

(CROSSTALK)

TAPPER: The filet, why couldn't you sell it?

PAWLENTY: Well, there's a lot of factors that go into a successful campaign. Obviously, we had some success raising money, but we needed to continue that, and Ames was a benchmark for that. And if we didn't do well in Ames, we weren't going to have the fuel to keep the car going down the road. But also, there's a lot of other choices in the race. And for me, what I brought forward I thought was a rational, established, credible, strong record of results, based on experience governing -- a two-term governor of a blue state. But I think the audience, so to speak, was looking for something different.

TAPPER: Well, that is a question about the -- today's Republican Party. Do you think that they're not looking for somebody that has worked with Democrats? Do you think they're not looking for someone that has results? You've derided those people who are voting for entertainers as opposed to people who can lead. Is that just not what the Republican electorate is looking for right now?

PAWLENTY: Well, I congratulate Congresswoman Bachmann on her victory and, for that matter, Congressman Ron Paul's close second. I mean, those are very impressive numbers. They lapped the field almost. And so congratulations to them.

But, you know, this is a long journey. The party is going to be now more broadly discussing who they want for their candidate, not just in Iowa, but in other places around the country. So we don't know what this ultimately will look like, but what we do know, at least for Ames and for Iowa and for me, is my record of being a two-term governor in a blue state with all the record -- results that I had wasn't sufficient to get us to the next phase.

TAPPER: Well, you raise a good point. This is a long process. And other candidates in previous years have stuck it out, waited for other campaigns to implode or go away. I think that there are a lot of people who wonder if Rick Perry is really all that his -- the hype says he is, that wonder if Congresswoman Bachmann can go the distance. Why not stick it out?

PAWLENTY: Well, because we needed to get some lift. You know, I'm from a small state. I don't have a big national financial network or political network. And so -- I think the measure of us in this phase was really, can you get some lift out of Ames to get the ante, if you will, to get to the next round? And that didn't happen, unfortunately. I wish it would have; it didn't happen. But even at a minimal level, you need to make sure that you've got that kind of ability to continue on and hopefully get some momentum, but that pathway doesn't appear available to me.

TAPPER: This must be personally devastating. I mean, you've worked very hard for this for a long time. And as a young politician, it's everyone's dream to be president of the United States. What is -- what is it like personally? I mean, I realize you get to spend more time with your family now, and you actually mean that, because you actually have a family you want to spend time with. But -- but how -- how difficult is this?

PAWLENTY: Well, first of all, I'm not so young anymore. I've turned 50, and I'm feeling the years there. But beyond that, it's not that difficult. I'm doing this because I love this country and I want to defeat Barack Obama, because I think he's got it on the wrong course.
But I don't get my identity or my sense of worth or my values or my faith from politics. I first get it from my personal faith in God. And then I believe in this country. I love this country. I believe I can make a contribution to it. I thought I would have been a great president, but, obviously, that pathway for now isn't there.

TAPPER: You've said in the past that the Republican Party needs to be careful in not being -- and not be reckless in choosing the nominee. Do you think Michele Bachmann would be a reckless pick? You can tell me now, because you're not running anymore...

(CROSSTALK)

PAWLENTY: Well, the -- this thing is going to unfold over the next six, eight months. And this is a long road, as you well know. So all of these candidates, whether it's Congresswoman Bachmann, you know, Governor Perry, all the others, they're going to be tested. And this -- as you know, it's a big, bright light that comes down on you, and we'll see.

But I do believe that we're going to have a very good candidate who's going to beat Barack Obama. But Barack Obama's numbers aren't very good nationally, and in the swing states that are going to decide the election, they're terrible.

TAPPER: Right, but the wrong nominee...

(CROSSTALK)

TAPPER: ... could still lead to Barack Obama winning.

PAWLENTY: Yeah, that wouldn't be helpful. But sometimes, you know, what looks certain this summer will look different next summer. We don't know what's the right or wrong nominee. And all of them are going to be tested, and somebody who can thrive in this process will have their meddle tested, and they'll be improved. And so a lot of times you see candidates start out weaker, they get stronger over time, or start out strong and fall by the wayside. So we just don't know, but I'm confident that our candidate will be a strong candidate. We've got these wonderful ex-governors in the race, people...

TAPPER: Are you going to endorse anyone?

PAWLENTY: Probably eventually, but not anytime soon.

TAPPER: Would you be willing to consider being a vice president to one of these nominees...

(CROSSTALK)

PAWLENTY: No, I've been down that road. That's not something I'm even going to consider.

TAPPER: Do you think Michele Bachmann is qualified to be president?

PAWLENTY: Well, I think she's qualified to be president.

TAPPER: You do?

PAWLENTY: I think now she's going to have to make her case to the American people about whether she's the best candidate and why she should be the Republican nominee and why she should be the next president against Barack Obama. And time will tell whether she can do that.

TAPPER: And what's next for you?

PAWLENTY: Well, what's next, I'm going to take my daughter to college over the next few days. And then I really don't know what the future holds for me. I have absolutely no plans, which is at the same time very liberating, but also a little concerning, so I've got to get to work.

TAPPER: All right. Well, Governor Tim Pawlenty, we thank you for joining us on this -- must be a difficult morning for you, and we wish you well.

PAWLENTY: Thank you, Jake. Appreciate you having me on.

TAPPER: So the Republican field gets smaller by one, with former Governor Tim Pawlenty dropping out, but Congresswoman Michele Bachmann, the victor, still has a long road to the nomination. And she joins me now. Congresswoman, first of all, congratulations on your victory.

BACHMANN: Thank you, Jake. Thanks for having me on.

TAPPER: Now, do you have any reaction to Governor Pawlenty dropping out?

BACHMANN: Well, I wish him well. I have great respect for the governor. We've known each other for a long, long time. And he brought a really important voice into this race. And I'm grateful that he was in. He was a -- really a very good competitor.

TAPPER: You guys did have words during -- during the campaign, and one of the -- you seemed to represent a more uncompromising Republican. He seems to represent more of a compromising Republican, someone willing to make deals. One of the reasons you did so well in the straw poll was because your message resonated so much with Tea Party Republican, with Christian conservatives. I'm wondering, how do you expand beyond the Republican base? Why
would a moderate Republican vote for you?

BACHMANN: Well, everywhere I've gone, all across Iowa, there isn't an event that I do that I don't have people come up who say that, "Michele, I'm a Democrat, and I'm voting for you," "I'm an independent, and I'm voting for you." They'll me, "I voted for Barack Obama, but I'm not voting for him again. I like you; I like what you say." And I think it's because I'm talking about what people really care about, and that's turning the economy around and job creation. And I've been there, and I've done that. I'm a former federal tax lawyer. And my husband and I also started our own successful company. I get it with job creation.
And I think what people see in me is that I'm a real person. I'm authentic. And they want someone who's going to go to Washington and represent their values.

That's really what you saw here in Iowa in the straw poll yesterday. You saw a big message sent to Washington. People really saw kind of the punch to the gut that America got this last week, and they really want someone that they can trust that they believe in who's actually going to turn the economy around.

TAPPER: Governor Perry jumped into the race yesterday. And like you, he's a hero to the Tea Party and to social conservatives, but he's also the nation's longest-serving governor with a record of creating jobs. He's leading you in some national polls. He has great support among your base. He has the executive experience you do not have. Why should a Republican voter pick you over Governor Perry?

BACHMANN: Well, I've been in Washington fighting the fights for the last four or five years. And I've been at the tip of the spear on these fights, for instance, raising the debt ceiling. I was the leader for the last two months saying, "Let's not raise the debt ceiling." I had a plan for not going into default and not raising the debt ceiling. The president had no plan. I was the first member of Congress to introduce the full repeal of Obamacare and of the Dodd-Frank law. And I fought against the Obamacare bill and brought literally tens of thousands of Americans to fight it.

I think that's what I've demonstrated, is that I have a core set of principles that I believe in. I'll fight for them. That's what we need in a president of the United States, because a president is more than just a manager. What they really bring is leadership to bear. They appoint good people, and they bring leadership. And that's what we need, is someone who we can believe in and trust in, who's going to stick to what they say.

TAPPER: Don't you think Perry is now your chief competitor, in terms of you -- you guys are going after the same voters. You have a lot of the same themes. Why would someone pick you over him?

BACHMANN: Well, I think because I have a demonstrated, proven record that I will fight for what people care about. I am bringing that message, of when it comes...

TAPPER: And he hasn't been fighting for what they care about?

BACHMANN: Well, you know, he'll run his own race, and he has his own message. I have mine. And I think of it, again, on the -- on the national stage, I've been involved in all of these issues and will continue to be.

TAPPER: Governor Pawlenty wondered if you even met the minimum requirement to be president because you lacked executive experience and results.

BACHMANN: Well, you know, there is no requirement in the Constitution that one be a governor in order to go into public service. Ronald Reagan was a governor, but what made Ronald Reagan great wasn't his governing experience as a governor. It was his core set of principles. Jimmy Carter was also a governor, but I don't think anyone would argue that America prospered and flourished under Jimmy Carter's presidency. So being a governor and having governor-level experience isn't the number-one requirement. It's really, who is the person? What is their character? That's what the Federalist Papers talked about. What's their character? Who are they? What have they done?

In Minnesota, I led a movement and put my voice behind changing education. That's really how I cut my teeth in politics, was on education reform. And we're not a conservative state. We're far more of a liberal state. But I brought Democrats and independents and apolitical people together. We actually changed our entire education system in Minnesota, because I brought people together, and we had reform. That's what I'll do as president of the United States.

TAPPER: You talk about your leadership on the debt ceiling issue, but Rick Santorum, who came in fourth in the straw poll, called your position on just refusing to raise the debt ceiling, he said it was not only irresponsible, but outrageous, since immediately the government would have to cut 40 percent of the government. What cuts would you make?

BACHMANN: Well, it's not outrageous at all. What's outrageous is turning us into the biggest debtor in the history the world. No nation has ever been in debt to the level that we are. And it wasn't that long ago that we were the world's largest creditor. We have to get our house in order. This year alone, we've brought in $2.2 trillion in revenue from all the taxes we pay in, and then we spent not only every penny of that, but we spent $1.5 trillion more.

TAPPER: Right. So what would you cut?

BACHMANN: That's a problem.

TAPPER: What would you cut?

BACHMANN: Well, immediately, I think what we need to do is recognize that we will tell the markets that we will pay the interest on the debt, don't worry about default. Number two, we will pay our men and women in military. It'd be irresponsible not to. And anyone who's currently on Social Security, you get paid. But beyond that, I would bring all members of Congress together. And this isn't some project for 10 years and 15 years down the road. Right now, we're going to reform entitlements. We're going to reform them for anyone who's currently not on them. We're going to change them so that they'll work, because...

TAPPER: Medicare, Medicaid?

BACHMANN: Medicare, Medicaid, they have to be changed. Why should we continue to run these program the way we did 45 years ago? Systems
have changed. We can -- we can make these far more efficient than what they are. Social Security is another program, 80 years old. Why would we continue to run it in the same way we did 80 years ago? Let's modernize it so it's there for people who depend on it.

TAPPER: One last question I wanted to ask about. You once characterized homosexuality as, quote, "personal bondage, personal despair, and personal enslavement." Do you believe that?

BACHMANN: Well, I am running to be the president of the United States. I am not running to be any person's judge. And I give -- I ascribe dignity and honor to all people, no matter who they are. And that's how I view people.

TAPPER: So you would appoint an openly gay or lesbian person to your administration?

BACHMANN: I would look, first of all, will they uphold the Constitution of the United States? And, number two, are they competent to do what they need to do? And are they the best at who they are? That's my criteria, nothing more.

TAPPER: Last question, and that is, does Pawlenty leaving the race and Rick Perry coming into the race change your strategy at all?

BACHMANN: Well, I think every day going forward we'll take a look at what's happening with strategy, but our main strategy is to win.
Obama is my strategy. I intend to be the nominee of the Republican Party and to take him on and to defeat him in 2012, because we have to
turn the economy around and create jobs. That's what I'm going to do. And I'm committed to not resting until we repeal Obamacare.

TAPPER: All right. Congresswoman Michele Bachmann, thanks so much for joining us, and congratulations again.

PAWLENTY: So I want you to do everything you can here in the closing hours of the Ames straw poll to get support to my campaign. I want to look you in the eye, each of you in this arena, and tell you: I know what this country needs.

(END VIDEO CLIP)

TAPPER: Tim Pawlenty in happier days. Joining us to discuss Mr. Pawlenty and all of the Republican politics on our table-less roundtable, as always, George Will, Fox News contributor and author of the New York Times best-selling "Of Thee I Zing," Laura Ingraham, Kay Henderson, news director of Radio Iowa, and ABC news analyst Matthew Dowd. Thanks so much for joining us. Sorry about the table. And, George, I'll start with you. The results. This event, the straw poll, has been called an inherently meaningless event that can have huge impact. And it did.

WILL: It did. It's not predictive very reliably of the winner of the caucuses. Neither are the caucus predictive of the winner of the nomination. But the winnowing process is up and going fast. The two winners are not apt to be nominated, because Ron Paul's constituency's intensity is about inversely proportional to its size, and he has a very low ceiling.

TAPPER: So you don't think the Republican Party is now in favor of an Iran with a nuclear weapon?

WILL: I do not. And Michele Bachmann may be this year's Huckabee. That is, Huckabee was made for the Iowa caucuses because of the
evangelical Christian component of the participants, but he found also that when he left Iowa and went elsewhere, he, too, had a low ceiling in
less congenial states.

TAPPER: Laura, do you agree with that? Did Iowa just put forward two people who have no chance of getting the nomination?

INGRAHAM: Well, I think there's only probably one room ultimately for a real social conservative to go up against probably Romney. And right now, it looks like it's a Perry-Bachmann race for the social conservative vote.

And I think that's going to be the interesting dynamic. I don't think Perry is going to be focusing on Romney right now. I think Perry's going to be focusing on Bachmann. Bachmann could maybe take a lot of these Western states, Midwestern states, and Rick Perry is suited to take Southern states and take them fast.

Conservatives are going to have to make a tough decision soon. Is it going to be a Perry social conservative? Or is it going to be a Bachmann social conservative?

DOWD: Jake, what I think is really interesting is, first, Ames has never had a history of picking winners, but they've definitely had a history of picking losers. And this process quickly winnowed this race from 10 or 11 candidates to basically three, maybe three-and-a-half candidates. But I think two things for me came out of what happened in Ames yesterday, is, first, this is a Republican electorate that's very hot, and they do not want cool candidates. They -- this is an electorate that really wants passion. And yesterday, first, passion trumps organization. Ron Paul and Michele Bachmann has the passion. The other candidates had organization. They didn't win.

The second thing is, is the Republicans' establishment ability to control this race is extremely limited, extremely limited. The ability of Washington Republicans and the typical Republican standards (ph) to say, "This is who we want, and this is what's going to happen," when you had basically two candidates who were out of the mainstream of the Republican Party, one of which supports legalization of drugs and is anti-war as George McGovern, gets almost two-thirds of the vote at the straw poll...

TAPPER: Ron Paul, you're talking about.

DOWD: ... you don't have a Republican establishment that has great ability to control this raise.

INGRAHAM: We saw that with the rise of the Tea Party, though, right? I mean, the establishment has been on the run since the midterms last year, and it continues.

TAPPER: Kay, as our reporter, as our eyes and ears on the ground here in Iowa, Tim Pawlenty supposedly had the state wired, he had organization at the straw poll yesterday. I saw a lot of people in those green Tim Pawlenty T-shirts. What happened?

HENDERSON: They wore their green Tim Pawlenty t-shirt in and voted for Michele Bachmann. I talked to a number of people who went -- ate the
barbecue, enjoyed the festivities at the T-Paw Tent, and then went in and voted for someone else.

I think I've sort of seen this movie before. It's the contest to be the not Romney. And what you saw yesterday was Michele Bachmann energizing what you mentioned, Mr. Will, as the folks who had supported Huckabee with another component, this group of Tea Party activists who started in the state being upset with the, quote, unquote, "establishment" way back in 2008. Her campaign is managed by a state legislator who won in 2008 without any party support whatsoever. So she's coalesced those forces and has really sort of ridden them to victory in the straw poll, and then it's fight night tonight in Waterloo.

TAPPER: George, there are a lot of Republicans in Washington, as you know, who are very worried about Michele Bachmann getting the nomination. They think she's not electable. They point to statistics, such as Tim Pawlenty did better in her district in 2006 than she did. John McCain did much better in her district in 2008 than she did. She had to spend $11 million to get re-elected last time. Do they have a point to make? Is she not electable on a national stage?

WILL: Barack Obama's best hope is the Republican nominating electorate. He does not want this to be a referendum on his record. He wants it to be a referendum on the fitness for office of the Republican nominee. "Should this person have control of nuclear weapons?" is the threshold question in any presidential race. And I think they're going to find that, in this question between Perry and Bachmann, that's an easy choice. Furthermore, Texas is to Republicans what California is to the Democrats, the largest reliable source of cash and electorate votes. In six of the late eight elections, there's been a Texan on the Republican ticket; 17 of the last 48 years there's been a Texan president. So this is not unusual.

INGRAHAM: And the question, on the Texas front, I mean, all those Texas Pioneers, the Rangers, all the bundlers of all the big cash, they've been holding back. They've been on the sidelines. Now the question is, are they going to go to Bachmann? They're not going to Romney, for the most part. Are they going to go to Bachmann or are they going to go to Perry? In Florida -- in Florida and Texas, there's an enormous amount of electoral votes and enormous amount of money.

DOWD: I don't think -- one thing about Michele Bachmann I think we ought to say -- have to say, I am -- you know, whether you agree with her on issues or not, I'm exceptionally impressed with her ability in this race. And though many people say, "She can't win, she can't win," I have heard that song before through a lot of people in Washington, D.C. They said that about Ronald Reagan, actually. "This guy can't win this. If we nominate him, we're going to lose the election. Jimmy Carter is going to win." We know how that happened.

I'm not saying she's Ronald Reagan. But this -- keep in mind, this is the first time a woman has ever won a straw vote, a caucus, or a primary in the Republican Party. And -- and while we can question her sort of -- her experience in all of that, she is a steely, well-put-together, disciplined campaign, and you cannot underestimate that in this race.

TAPPER: No, I think that's right. And, also, she's also good at the retail politics. She's really good -- you know, there are a lot of politicians out there who don't like people. And we all know who they are.

(LAUGHTER)

TAPPER: We all know who they are. Some of them have served as president. And she -- she likes going out there and shaking hands. I mean, what did you see out there?

HENDERSON: She's indefatigable. And she connects with people. She has the pizzazz that people are looking before, because as you mentioned, Republicans are upset in the same way Democrats were upset in 2004 when they got behind Howard Dean. They don't understand why Barack Obama is president, and they're coalescing behind her. They may coalesce behind Rick Perry. I don't know. I haven't seen that on the ground here, because obviously he hasn't been here.

TAPPER: Let's go -- and let me just -- I want to talk about Rick Perry. He announced his candidacy for president yesterday in South Carolina. Here's a little clip of that.

(BEGIN VIDEO CLIP)

PERRY: We'll create the jobs and the progress that's going to be needed to get America working again. And I'll promise you this: I'll work every day to try to make Washington, D.C., as inconsequential in your life as I can.

(END VIDEO CLIP)

TAPPER: George, you were there. What'd you think?

WILL: He was talking, wisely, to redstate.com, website, conservative bloggers. He can fire up the Republican base the way Michele Bachmann can and the way we as yet have no evidence that George -- that Mitt Romney can. It's very hard to win a nomination in this country if you can't fire up the base. You can't win the White House just with the base, but you can't win the nomination without it. And he's really good at that.

TAPPER: You -- you followed his career in Texas for a long -- probably longer than you want to admit.

DOWD: Twenty-five years. Twenty-five years. I took his filing when he
was a Democrat, ran as a Democrat at the Texas Democratic Party.

This guy is an incredible campaigner. And for me, having watched George Bush and having worked for George Bush and having known Rick Perry, he is actually a better campaigner at this point than George Bush was. Now, part of his problem is, he sounds a lot like George Bush. He looks like a president, though, if you look at the picture, but he sounds and has similar mannerisms to George Bush. I don't think that's as much of a problem in the Republican primary; it could be a problem in the general election. But don't underestimate this guy. This guy took apart an incumbent Republican U.S. senator who had an 85 percent approval rating and beat her by 20 points in the primary by being Tea Party before Tea Party became cool.

TAPPER: Laura, your thoughts on Perry?

INGRAHAM: Yeah, I've interviewed him a bunch of times. And what's significant to me is that the Obama war room is primarily focusing on two people: It's Perry, and it's Romney, both of them. I mean, Michele Bachmann to some extent. Perry's the new threat. They're going through the Texas record. Is it really as wonderful as everyone says? Isn't it just based on a fossil fuel economy? So they're going to bring in the Big Oil stuff. Perry's people are coming back with, "We are a health care state." I mean, anyone who's been to Houston, you know that big hospital complex. You know all the jobs created by that. For some reason, all these health care companies come to Texas and set up shop. It's an amazing story. But they're already poking holes in it. They see him as a big threat.

TAPPER: It's not just the White House that's poking holes. The Wall Street Journal has a tough piece on him.

INGRAHAM: Yeah.

TAPPER: But we're going to have to take a quick break. When we come back, another difficult week for President Barack Obama. Wall Street is reeling, and he's going to take to a bus tour in the heartland of the country. Will it make a difference? More with our roundtable in a second.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

VAN SUSTEREN: Wall Street is in a panic mode. The Dow plunges more than 634 points today.

(UNKNOWN): Dow closing up 429. This is the Dow's biggest gain this year.

SAWYER: The Dow plunged again today, this time 519 points.

(UNKNOWN): Stocks soaring with the Dow up more than 400 points.

STEPHANOPOULOS: Wild swings in the markets. Every single day a different bounce.

(END VIDEO CLIP)

TAPPER: A stock market that needs to take some lithium. We're back here with our roundtable, George Will, Fox News contributor and author of New York Times best-seller "Of Thee I Zing," Laura Ingraham...

Thank you so much for joining us. So let's talk about the stock market and the effect of what we're going through as a country economically and President Obama. He's launching this bus tour tomorrow in Minnesota. George, the Fed made an announcement this week that you thought was
significant.

WILL: Extraordinary. It's without recent precedent and full of political portend for the president. The Fed said, for two years, we're going to continue the policy of essentially zero interest rates. That tells you that the Fed believes there's no recovery in our future. Now, last summer was recovery summer. The recovery actually began two Junes ago, in June 2009, and people still don't feel there's a recovery here. And the Fed is essentially saying, get used to it.

TAPPER: Amy, what -- what can the president do? I mean, you hear him talking about patent reform, trade deals.

WALTER: Right. Right.

TAPPER: What can he really do, with the Republicans controlling Congress and such a political force right now, momentum for cutting the budget?

WALTER: Right. Well, what can he do actually and what he can do politically, those are going to two different stories. So what can he do legislatively? The one thing we know he can't do, as you said, there are roadblocks along the way. And he's got to get out of -- and I think Republicans do, too -- the thought that we can just do this on a tax-versus-spending debate. That debate has been had; it's done. In order for the president to move to that next level, if he's going to be able to change this dynamic at all, turn this economy around for 2012, it has to be something new and bold than gets beyond the same old talking point that we've been mired in, in these last few weeks.

DOWD: Yeah, part of that -- I think part of -- part of the problem the president had and his administration has had if they keep approaching this like it's a marketing or a communications problem. To me, it's like a restaurant where nobody wants the food and they've changed the colors on the menu and they think that's going to solve the problem. He has to actually -- I think he has to take some accountability. He can't keep pointing the fingers and saying, "It's this person's problem, it's this person's problem. They did this, and they did this. And, oh, boy, I'm presiding over a horrible economy, and I'm doing my best."

He has to actually -- like Ronald Reagan -- he has to actually -- the only thing he has left in his tool belt is to re-instill some confidence of the American people and businesses to actually invest and move forward. He has not re-instilled any confidence in this economy.

INGRAHAM: We learned in the L.A. Times yesterday that the president no longer gets a daily briefing on the economy. I had to read it two or three times. This must be a satire. Someone's written this. The president is not getting a daily briefing on the economy? What does that -- message does that send to the markets? I think what -- Matthew's right. There is not a sense that this president is actively engaged on the most serious problem facing our country now, which is, we're on the brink of economic stagnation as far as the eye can see.

He needs to look engaged. He has to be able to come out and say, you know, I said it a couple of months ago, and I'm going to say it again: The buck stops here. I'm bringing in a new economic team. Thanks, Tim Geithner, but we are retooling our shop, and we are going to be coming out with a series of ideas that are going to surprise people. They're not ideological. They're about creating jobs in this country. It has to be bold. And I would agree. We have to change the momentum right now. He seems like the absentee president.

DOWD: He does have a huge benefit, though, which is, is his numbers, while bad, the Republican Party and the Republicans in Congress are even worse. And so we are at a time where it's not like we have this inverse relationship where the president does really bad and the out-party is doing really good. He has a benefit, which is what he -- they're going to try to do. They're going to try to vilify the Republican candidates, the Republican Congress, and all that. He has -- there is a political benefit in that. You're right, he has to solve the economic problems, but the Republicans right now don't have a lot of voice in this.

WALTER: Right. Two points. One, he doesn't run against Congress. He's going to be running against somebody, most likely who has -- it could be somebody who's associated with Congress, but it could be somebody who's not. But here's the more important point. He has defied political physics for some time now. He's defied political gravity. His -- you're right, Matt. His approval rating is in the mid-40s, and even though the economy and his handling of the economy is down in the 30s.

Eight percent of people think -- in this country think that the economy is good or excellent; 18 percent think that we -- the economy is going
to get better. And yet his approval rating is still at 45 percent or 46 percent. At some point, those numbers have to come back down to Earth, right? Those two numbers have to get back together...

(CROSSTALK)

DOWD: And that's starting to happen. His August -- this August is as bad as many Augusts of any president.

INGRAHAM: Colby King in the Washington Post today writes that he cannot believe -- and Colby King, not a raging conservative -- can't believe that the president, with the country hurting, is about to take off to one of the most elite, affluent islands in the United States, which is Martha's Vineyard, not begrudging a vacation, but the optics are terrible.

WILL: When Rick Perry's plane took off from Charleston yesterday heading for New Hampshire and on to Iowa today, he flew out of Charleston airport over a huge Boeing plant, creating 2,000 jobs directly, thousands more indirectly, that the Obama administration, through the National Labor Relations Board, wants to close. Now, the optics here are terrible. The cognitive dissonance of this administration is terrible. And what economists call exogenous events,
something from outside the system that shocks it, are all possible and possibly bad, particularly from Europe. The cascade effect of default from Italy, or Spain, or Portugal, or Greece, or something else, with their banks and our banks linked as they are, the ground is full of mines.

TAPPER: President Obama is starting to sharpen his tone. And in Michigan a few days ago, he basically came out and said, there's a lot more we need to do, but I can't do it with Congress -- with some in Congress, which is his new term for Republicans, some in Congress blocking me. Here he is Thursday in Michigan.

(BEGIN VIDEO CLIP)

OBAMA: There are things we have to do to erase a legacy of debt that hangs over the economy. But time and again, we've seen partisan brinksmanship get in the way, as if winning the next election is more important than fulfilling our responsibilities to you and to our country.

(END VIDEO CLIP)

TAPPER: So, Laura, here's the question...

INGRAHAM: He doesn't care about winning elections, by the way. I'm just -- I'm laughing. I don't know if I'm going to able to answer this question...

TAPPER: He's above the fray. He's above the fray.

INGRAHAM: Yeah.

TAPPER: So, right now -- and we're a long way away from Election Day 2012 -- but right now, President Obama has never appeared more vulnerable. His approval ratings are low. He's -- he's under 50 percent in New York state in his approval rating. Is there a way Republicans can mess this up?

INGRAHAM: Well, it's looking less and less likely that the Republicans can screw it up, which is saying quite something. But what we talked about earlier, social conservatives, traditional conservative has -- have to be very careful of the next five months. I would say before Christmas, almost, they're going to have to start centering and getting their support behind one candidate. Because last time we ended up nominating John McCain, after Fred Thompson, and then it was Romney, it was Huckabee, all these people were all, you know, throwing their votes to different people and it ended up being John McCain's election. That didn't work out so well for the Republicans.

DOWD: Even how vulnerable he is and even how the circumstances of the economy, it is very difficult -- it has been historically very difficult to beat an incumbent Democratic president. Only one Democratic president who sought re-election over the last 120 years has lost, and that was Jimmy Carter. And what it took to beat Jimmy Carter was a Ronald Reagan. I don't see Ronald Reagan yet in this field. I think the Republicans have a great opportunity to win this, though I still think there's a huge opportunity they can mess this up. They may nominate somebody as unelectable as Barack Obama, so we may have two
unelectable candidates that people have to choose from, which obviously creates another scenario that could -- that another person could get in as an independent. But Republicans still have a great opportunity to mess this up.

TAPPER: So, Amy, George W. Bush was re-elected in 2004 with a 48 percent approval rating. President Obama might face the same kind of dynamic. What is his option?

WALTER: Well, the traditional rule of politics is, if you're unpopular, your goal is to make the other person even more unpopular than you are, and that's how you win. But this is why it's different this time around is that we're not in traditional times. When you see an unemployment rate at 9 percent, when you see 70 percent of the public saying we're off on the right track, those arguments just don't work as well, and especially when you're the guy who's in charge of the economy and people feel this badly about the economy to say, "Well, this guy or this woman is going to be worse than me"? That's a tough -- that's a tough place to go.

TAPPER: George, 20 seconds.

WILL: The most historic blunder this president made was his stimulus package which discredited the idea of stimulus packages by being an amalgam of all the liberal appetites stored up over 30 years. Therefore, when he says, as he did in that sound bite, we need to do this, this, and this, all the country hears is stimulus, and they say, "Been there, done that."

TAPPER: The roundtable continues in the green room at abcnews.com/thisweek. Next, a special look at a wild week in Iowa.

(COMMERCIAL BREAK)

TAPPER: Here in Iowa, it's been a heck of a week. The Republican candidates were out in full force, and Iowa welcomed them as only Iowa can. Here's a look back at some of the sights and sounds.

(BEGIN VIDEOTAPE)

TAPPER (voice-over): Ah, August in Iowa. People flocked to the state fair in Des Moines. They come for the rides, the music, the animals, and the food.

(on-screen): If you can put it on a stick and fry it, you can probably get it here at the Iowa state fair. This year's big hit: deep-fried butter on a stick.

(UNKNOWN): Here's one butter, OK?

TAPPER (voice-over): Yes, that's right, four ounces of butter dipped in honey and cinnamon, then deep fried and drizzled with a sugary glaze.

(UNKNOWN): Oh, championship bite.

TAPPER: Surprisingly, even with all this fried grub, Iowa is only the 20th most obese state in the nation. And as you might expect, all these Iowans attract a flock of Republican candidates, stumping for the first test on the road to the nomination, the Iowa straw poll.

(on-screen): You have all these Republican candidates converging on your wonderful state. Do you have a favorite?

(UNKNOWN): We like a couple of them. No one really stands out terrifically, unfortunately, but we really like Michele Bachmann and
Herman Cain.

TAPPER: As Iowans, you guys are so used to candidates coming and working hard for your vote.

(UNKNOWN): Yes, that's kind of like Romney. You know -- I mean, you know where he stands. He's never -- hasn't been here, because I don't think he wants to get beat, because I think he'd get beat.

TAPPER (voice-over): National frontrunner Mitt Romney, who is not mounting a very serious challenge in Iowa, at least publicly, is here nonetheless. He was here on Thursday grilling pork.

ROMNEY: You guys got to pay $10 bucks for that, you know.

TAPPER: And trying to connect with an unfriendly crowd.

ROMNEY: Social Security, Medicare, and Medicaid account for about half of federal spending.

(UNKNOWN): A lie!

(CROSSTALK)

ROMNEY: Just hold on. One is we could raise taxes on people. That's not the way...

TAPPER: Former Utah Governor Jon Huntsman could be found at the butter cow sculpture, which is celebrating its 100th anniversary. Attendees can show their political preference with kernels of corn. President Obama was way ahead in the kernel vote, but the president wasn't getting much love from the candidates at Thursday night's debate on Fox News Channel, although many of the salvos were aimed at each other.

PAWLENTY: It's undisputable fact that in Congress her record of accomplishment and results is nonexistent.

BACHMANN: You said the era of small government was over. That sounds a lot more like Barack Obama, if you ask me.

PAWLENTY: She's got record of misstating and making false statements.

GINGRICH: There's too much attention paid by the press corps about the campaign minutiae and not enough paid by the press corps to the basic ideas that distinguish us from Barack Obama.

ROMNEY: Look, I'm not going to eat Barack Obama's dog food, all right? What he served up was not what I would have done if I'd have been president of the United States.

BAIER: I understand. You have the next question.

(CROSSTALK)

SANTORUM: ... haven't had a chance to say a whole lot.

BAIER: You have the next question, Senator.

TAPPER: Sorry, Senator, it must have been tough to get a word in with those other seven candidates on the stage. Here in Ames, we also ran into David Axelrod, a key campaign strategist for President Obama's re-election. He was here scouting the opposition. This week's gyrations on Wall Street were the wildest of the Obama presidency.

(UNKNOWN): When I woke up this morning, this is not what I expected to see.

STEPHANOPOULOS: The Dow down more than 600 points.

BAIER: It was a buckle-your-seatbelt kind of day in the stock market.

TAPPER (on-screen): It feels like the job of re-electing him, of getting him re-elected, your job, has gotten tougher, that he's more vulnerable than he's ever been. I know we're a long way away.

AXELROD: Yeah, and one thing I know is that, as -- as -- as these -- all these Republican candidates mortgage themselves to the most strident voices in their party, they're making it more difficult to win a general election.

TAPPER: How do you see evidence of that with the Republicans?

AXELROD: Well, look, every single one of them stood by and encouraged the kind of strident brinksmanship that we saw around the debt ceiling debate, instead of being a force for compromising and a force for moving -- for solving the problem.

TAPPER: Can I ask you a substantive question or two?

PALIN: Yeah, hold one second. I'm going to meet a heifer first.

TAPPER: A heifer first?

PALIN: First, yeah.

TAPPER (voice-over): Friday, just hours after the debate, the action returned to the state fairgrounds in Des Moines, as a political star reappeared after a six-week hiatus.

PALIN: You don't sound like Iowa, sir.

TAPPER: Sarah Palin was not at the debate, was not on the straw poll ballot, and is not even a candidate, at least not yet.

(on-screen): I don't understand why you haven't thrown your hat into the ring if you're going to throw your hat into the ring.

PALIN: I still think it's early. I think it's too early. And I think that there's still plenty of time for not just me, but others to -- to consider jumping in the ring.

TAPPER: So by next month?

PALIN: I think that, practically speaking, that has to be kind of a drop-dead timeline.

TAPPER: What did you think of the debate last night?

PALIN: It was good.

TAPPER: Yeah?

PALIN: They kind of took their gloves off. That was good.

TAPPER: What would you do if you were president right now for the economy? What would you do for the economy?

PALIN: I'd eliminate the uncertainty in the economy and let our job creators know that, number one, we will cut taxes, we'll cut corporate taxes, we'll cut every tax that Congress would allow.

TAPPER: Here's Michele Bachmann diving into a corn dog and Newt Gingrich strolling with his wife.

(on-screen): All these photographers? Former Governor Pawlenty from Minnesota is flipping pork.

PAWLENTY: Over the shoulder.

PERRY: Since June of 2009, Texas is responsible for more than 40 percent of all of the new jobs created in America.

TAPPER (voice-over): Saturday, far from Iowa, a monkey wrench was thrown into the GOP race, as Texas Governor Rick Perry officially became a candidate in Charleston, South Carolina.

PERRY: And I know something. America is not broken. Washington, D.C., is broken.

(APPLAUSE)

TAPPER: But back in Iowa, the campaign circus was now in Ames on the campus of Iowa State University for the straw poll, where each candidate had a hospitality tent and inducements to attract supporters. Michele Bachmann had country star Randy Travis.

(on-screen): If you look to my left, it's the Herman Cain bouncy castle.

CAIN: Hey, Jake, how are you doing? I know you.

TAPPER: How are you? Good to see you.

CAIN: Good. Good to see you.

TAPPER: So, let me tell you, this is your first straw poll. What do you think?

CAIN: I love it.

TAPPER: Do you think you have to come in top four? What do you think?

CAIN: No. If I come in dead last, this campaign is still going forward.

TAPPER: Is that right?

CAIN: That's a promise.

TAPPER: Well, that's a good attitude.

CAIN: Even if it's dead last. But, Jake, it's not going to be dead last.

TAPPER (voice-over): The candidates made their last-minute appeals...

SANTORUM: To suggest as a Republican Party that we can be a party about just tax cuts and spending cuts and not about strong families and strong faith and strong faith communities, you don't understand Iowa and you don't understand America.

(APPLAUSE)

TAPPER: Former Arkansas Governor Mike Huckabee, who won the Iowa caucuses last time around, jammed with the Crickets, Buddy Holly's old band, and some of the candidates.

(on-screen): This state means a lot to you?

HUCKABEE: You know, it does. But I think it means a lot to the country, because people don't appreciate the fact that when a candidate goes through Iowa, they go through one of the toughest political filters there is in America.

TAPPER (voice-over): Any state resident can vote in the straw poll, as long as he or she or someone on their behalf plunks down $30 bucks. After all, the main point of the straw poll is to serve as a fundraiser for the state Republican Party. By late evening, the ballots were counted, and the winner was announced.

(UNKNOWN): It's Congresswoman Michele Bachmann.

(APPLAUSE)

PAWLENTY: We needed to get some lift to continue on and to have a pathway forward. That didn't happen. So I'm announcing this morning on your show that I'm going to be ending my campaign for president.

(END VIDEOTAPE)

TAPPER: The -- the Sunday funnies are next. Stay with us.

(COMMERCIAL BREAK)

TAPPER: And now, the Sunday funnies.

(BEGIN VIDEO CLIP)

O'BRIEN: Fifteen percent of Republicans and independents are leaning towards supporting Rick Perry. Yeah. Yeah, half of Perry's supporters like his conservative values. The other half think he's the lead singer from Journey.

(LAUGHTER)

KIMMEL: The Dow dropped almost 635 points. That's the sixth-largest drop in history. And that's -- I'm angry about that, because for years, we've been told that our kids and grandkids are going to have to pay the price for our out-of-control spending. Now it turns out we have to pay for it? That was not part of the deal.

FALLON: This is pretty interesting. A new survey revealed that being an I.T. guy is the most hated job in the country. Or, as President Obama put it, "Wanna bet?"

(END VIDEO CLIP)

TAPPER: More from Ames, Iowa, right after this.

(COMMERCIAL BREAK)

TAPPER: And now, "In Memoriam."

(BEGIN VIDEO CLIP)

HEALY: The fruits of NIH's medical research have proven to be among our nation's greatest achievements. I think the most important thing is for women to -- to take charge of their own health. The Red Cross, in its beauty, is about helping people around us. It belongs to the American public. It belongs to the vulnerable.

TAPPER: This week, the Pentagon released the names of 36 service members killed in Afghanistan.

We'll be right back.

(COMMERCIAL BREAK)

TAPPER: That's it for us in Ames, Iowa. Be sure to follow us on Twitter, Facebook, and at abcnews.com. And later this evening, be sure to watch "World News with David Muir" for all the latest on the race for the White House. For all of us here, thank you so much for watching. We will see you next week.